Open house at China Resources Power

16-01-2017 | Insight

Following accusations of an environmental UN Global Compact breach, we actively engaged with China Resources & Power (CRP). The company convincingly refuted the allegations and demonstrated great openness to its stakeholders.

Sylvia

van Waveren

Senior Engagement Specialist

Speed read

The company was accused of a severe environmental breach

Media reports did not turn out to be fully accurate

Offering a call in Mandarin acted as a catalyst for the dialogue

CRP was accused of violating the UN Global Compact’s environmental principles 7-9. Allegedly, its coal-fired power plant in China’s Hunan province had been continuously pouring waste water and coal dust into a section of the famous Danxia landform since 2007, submerging a substantial part of it under sludge. In addition, the waste discharge is said to have polluted the local river, severely affecting agricultural activities around the plant. Reportedly, local residents’ access to drinking water has also been significantly restricted since the construction of the plant.

There was a lack of publically available information in the English speaking press about the alleged breach. However, the incident was reported by Chinese daily newspaper the Dongfang Daily and a few Chinese websites.

The Danxia landform

Engagement objectives

We decided to engage with the company. These were the objectives of our engagement:

Policy: We want the company to adopt a policy for the prevention of breaches of the UN Global Compact principles.

Stakeholder Dialogue: The company needs to maintain a constructive dialogue with stakeholders about social responsibility, and about breaches of the UN Global Compact when they occur.

Transparency: The company needs to be transparent on the nature and possible investigation of the breach. In addition, stakeholders in a company need to be able to understand how the company implements its policy to prevent breaches.

Elimination of Breach: The company must provide proof that any breach of the UN Global Compact principles has been eliminated.

Risk Management Systems: The company must develop the risk management systems required to effectively implement the policy.

Having had some written correspondence with the company, we requested a conference call to further discuss the matter. It took a very long time before this finally took place, and we believe that the company in the end agreed because we were able to offer a call in Mandarin. The call, which took place on 25 February 2016, was attended by an impressive line-up of the Executive Director & CFO, the Deputy General Manager of Thermal Power Business, the General Manager of Hunan Branch, the General Minister of Hunan Branch and the Head of Investor Relations.

Media reports ‘inconsistent with the facts’

The company stated that the media reports about the heavy pollution in Danxia were inconsistent with the actual facts. The ‘polluted lake’ reported by the media did not naturally exist before. It had been deliberately built to store waste water and coal dust (ash field). The company had built a dam to form a closed storage space for the dry coal ash, which was part of the original environmental protection plan before the construction and had been approved by the relevant authorities. The waste water is released into the ash-field and then recycled after sedimentation. The whole operation is done in a closed loop. It’s normal practice, which has been approved by the authorities. The coal dust was released from 2007 to 2012. In 2012, CRP stopped using this ash-field.

Since then CRP has taken actions to clean up the area. It has succeeded in planting reed on the ash field and now almost the whole area has been covered. We have received photos as proof. In order to clarify the situation and show the reality to the public, CRP organized several ‘Media Open Days’, inviting media organizations to visit the plant and the ash field. After the event, all the media organizations reported objectively about the company’s efforts to protect the environment.

The company insisted that it did not cause any irreversible damage to the local environment, and provided us reasonable arguments and supporting evidence. We think that the company sufficiently addressed the public’s concerns by organizing the on-site events. We have encouraged them to disclose more information on their website and increase their transparency on such issues. We were also invited to visit the respective plant.

Going the extra mile

After the call the company sent us links to relevant news, public opinions and green development reports in relation to the Hunan Branch ash dam. It also provided English translated documentation such as the official documents on Health, Safety and Environment and further materials that show the company’s response to media allegations and government investigations after the incident. We feel that the company tried hard to clarify the issue to us.

After the call, we successfully closed the objective 'elimination of the breach'. Our next step was to analyze the 2015 annual and CSR report and conduct a check on the transparency of the company.

Open days

In the 2015 CSR report the company describes the Hunan open days initiative: ‘Build Trust with an Open Door’. The Hunan Branch invites representatives of the government, the media, environmental protection activists, students and neighboring residents to visit the Hunan premises quarterly. The company showcases its work and results achieved in safe production, environmental protection, energy savings, technological innovation, community building and corporate social responsibility. Since 2014, the Hunan unit has organized 11 open days with more than 6,000 participants, effectively improving China Resources & Power’s brand reputation promoting the enterprise’s green transformation and strengthening its license to operate.

Based on the company’s substantial outreach to local communities we no longer see a risk of non-compliance with the UN Global Compact principles. Further operational incidents have not occurred in the past four years. We therefore successfully close the engagement with China Resources Power.

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